John Nash — December 7, 2018 — December 7, 2018
Marketers can do more than just deliver engaging and profitable customer experiences with personalized interactions and communications. They can also optimize marketing program performance and engage in omnichannel marketing, which reduce the costs of customer interactions. In fact, according to Harvard Business Review, marketers who use personalization can reduce their acquisition costs by as much as 50 percent and can increase the efficiency of their marketing spend by 10 to 30 percent.
You can decrease costs with a customer data platform (CDP) through fine-tuning operations based on deeper customer understanding. You’ll be able to drive growth by monetizing your customer data and save money by improving operational effectiveness and efficiency as a result. The insights and actions you can drive from a CDP will help you to:
- Decrease customer fatigue, churn, and service costs
- Modify your channel mix to lower-cost channels
- Lower the number of customer interactions needed to drive results
- Improve marketing, IT, and data science resource utilization
To put it simply, using a CDP to get a better understanding of customers’ preferences enables you to personalize the customer experience and reduce the number of customer interactions required to drive results. Further, you can vastly improve channel mix by using a CDP to access cross-channel data at the customer level and use this information to tune individual channels to individual customers. By using more granular values and actions associated with your marketing activities, you’ll be able to better assess channel performance and shift activities and budget to the most efficient and cost-effective channels.
It is also possible to achieve outsized results within specific channels by using a CDP for data-driven marketing techniques such as advanced matching and householding. For example, these techniques can put an end to over-mailing which reduces physical direct mail budgets by an average of 20 percent.
Optimizing marketing can help reduce costs in other ways as well. For instance, using a CDP to support progressive profiling and dynamic customer journeys provides a better customer experience by allowing you to respond to customers in their moment of truth, no matter where they are. Customers are more likely to convert as a result. The ability to be wherever customers are as they consider a purchase is not only wise, it is essential. More than 50 percent of customer interactions today happen during a multichannel, multi-event journey, according to McKinsey & Company.
Using a CDP can also cut operational costs by creating privacy-compliant persistent customer records that are accessible throughout the enterprise in real-time. CDPs provide a single point of control over data, empowering both applications and users to access it from across the organization to ensure the best customer experience and improve efficiency. Data science, IT and marketing resources are then able to spend their time creating powerful analytic models and customer experiences rather than struggling with inconsistent, inaccurate and inaccessible data. To achieve the best ROI, a CDP should also provide a single point of control over its data. This allows you to leverage your existing IT investments without having to replace systems that are already in place, another cost-saving operational benefit for the organization. On the whole, using a CDP to support personalized marketing can lead to double-digital savings. Data-driven personalization generates a marketing-budget saving of 30 percent, according to McKinsey.
Even when you consider the direct costs of implementing and running a CDP — software license, professional services and training, infrastructure, and support, maintenance, and data enhancement — you still clearly see a strong return on investment from the revenue growth and cost reductions you’ll gain by using one.
Industry leaders are capitalizing on this opportunity. According to the “Global Customer Experience Benchmarking Report” from systems integrator Dimension Data, 22 percent of executives say customer experience is a top strategic indicator of operational performance. Those companies and others like them have an advantage because they understand the cost-savings potential of customer experience and the data-driven marketing that underpins it.
Additionally, increasing personalization across channels to deliver superior customer experience not only reduces operational costs, it also drives revenue. According to The eTailing Group and MyBuys, a 500 percent overall boost in consumer spending is possible when marketers take an omnichannel approach. The research also found that 40 percent of consumers buy more from companies that personalize their experience across channels.
Investing in a CDP not only reduces costs by improving operational effectiveness and efficiency, it also drives additional revenue. The result is a double dose of profitable marketing practices.
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